WEBVTT - 7-Eleven Owner Gets Buyout Offer 0:00:02.920 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.960 --> 0:00:13.840 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:13.920 --> 0:00:15.840 weekdays at ten am Eastern. 0:00:15.520 --> 0:00:18.040 On Affle Car Playing and broud Otto with the Bloomberg 0:00:18.079 --> 0:00:18.720 Business app. 0:00:18.800 --> 0:00:22.000 Listen on demand wherever you get your podcasts, or watch 0:00:22.079 --> 0:00:24.480 us live on YouTube. 0:00:25.040 --> 0:00:27.479 All right, we'll get an M and a trade here today, 0:00:27.520 --> 0:00:28.920 which I think it's near and dear to a lot 0:00:28.960 --> 0:00:31.640 of folks that are particularly through seven eleven fans. I'm 0:00:31.640 --> 0:00:32.680 a wah wah guy myself. 0:00:32.720 --> 0:00:34.919 Crystal cover that story as well this morning. I mean 0:00:35.400 --> 0:00:39.879 seven to eleven has the Icy, which I like versus 0:00:39.920 --> 0:00:40.760 the Slurpie. 0:00:40.880 --> 0:00:43.880 What's the slur The Slurpy is? I think. 0:00:45.240 --> 0:00:48.560 Grainier? You know, the Icy is a lot smoother. Yep, 0:00:48.600 --> 0:00:50.400 And I'm a bigger fan of the Icy. Had one 0:00:50.440 --> 0:00:52.879 last night that my drive home from Gray State of Ohio. 0:00:53.440 --> 0:00:55.520 You were in Ohio? Yeah, what'd you drive? 0:00:56.120 --> 0:00:59.360 I drove back in my Dodge Challenger RT scat pack 0:00:59.440 --> 0:01:02.560 wide body on I eighty. Yeah that's a good cruiser. 0:01:02.640 --> 0:01:07.000 Yeah, exactly. Diana Rossettopania joints us here in our studios. 0:01:07.000 --> 0:01:11.279 She's a Bloomberg Intelligence consumer Staples Anos who is couch 0:01:11.480 --> 0:01:14.800 Tard and why are they buying seven eleven for thirty 0:01:14.800 --> 0:01:15.759 one billion dollars. 0:01:15.920 --> 0:01:22.160 Well, Cushtard is the second largest convenience store in the 0:01:22.280 --> 0:01:27.600 United States. They manage circle K, yes, and. 0:01:27.480 --> 0:01:29.760 That's why they have a French name that sounds funny 0:01:30.000 --> 0:01:31.040 to American years. 0:01:31.160 --> 0:01:33.720 Yes, it took me actually a while to be able 0:01:33.760 --> 0:01:37.760 to pronounce their name. But yeah, so they're very inquisitive. 0:01:38.240 --> 0:01:44.080 We're not that surprised that they are, you know, their stocks, 0:01:44.080 --> 0:01:47.560 that they want to buy something. But sevent eleven is 0:01:47.600 --> 0:01:52.520 actually a big name. There's valuations going from like fifty 0:01:52.840 --> 0:01:56.160 billion dollars to as much as like eighty five billion dollars. 0:01:56.600 --> 0:01:59.440 So for them to be able to do that, it's 0:01:59.520 --> 0:02:01.720 it's quite impressive. If they are able to. 0:02:02.240 --> 0:02:05.680 It's always surprising, I think to people who aren't in 0:02:05.720 --> 0:02:08.000 the know that seven to eleven is owned by a 0:02:08.080 --> 0:02:11.080 Japanese holding company, and I think they own Speedway as well. 0:02:11.360 --> 0:02:15.240 These seem like such American brands. So does Circle K 0:02:15.600 --> 0:02:18.440 and it's owned by a Canadian company. Is there going 0:02:18.520 --> 0:02:20.640 to be anti trust issues here? 0:02:21.000 --> 0:02:24.480 Well, for sure, the FDC, I mean, ask Kroger. They 0:02:24.560 --> 0:02:27.519 have been trying to purchase Albertson's for a couple of 0:02:27.639 --> 0:02:30.639 years now. So if they actually come up with the 0:02:30.720 --> 0:02:33.760 numbers and there's acceptance, I'm sure the FDC will have 0:02:33.800 --> 0:02:37.320 something to say. Seven eleven has like about fourteen percent 0:02:37.400 --> 0:02:41.680 of market share in the United States, whereas Skushtar with 0:02:41.760 --> 0:02:44.360 their Circle K brand, they have about five percent. So 0:02:44.400 --> 0:02:47.799 it definitely will be you know, up for again. 0:02:48.040 --> 0:02:50.120 I'm a wah wah guy, but you know I can. 0:02:50.120 --> 0:02:52.480 See is wah wah just like a New Jersey. 0:02:52.280 --> 0:02:53.480 No, no, but it is. 0:02:53.760 --> 0:02:56.760 What is it's the It's in the Northeast. There's mostly 0:02:56.800 --> 0:02:59.240 in the Northeast. So but yeah, there's. 0:02:58.800 --> 0:03:02.160 Explained to me this convenient store business. What's the economics 0:03:02.160 --> 0:03:03.000 of a convenience store? 0:03:03.000 --> 0:03:05.240 I just see people going in and out all the time. 0:03:05.760 --> 0:03:06.880 What's the economics? 0:03:06.960 --> 0:03:10.919 Well, basically, they want you to go in for your gas. 0:03:10.960 --> 0:03:14.800 They're very competitive in gas prices. Fuel margins have been 0:03:14.840 --> 0:03:18.120 improven in the past few years. Kush Star actually has 0:03:18.400 --> 0:03:22.280 about forty cents per gallon in terms of fuel margins. 0:03:22.320 --> 0:03:25.359 But what they're making money on is when you go 0:03:25.480 --> 0:03:29.560 into the store, particularly if you buy their sandwich sandwiches. 0:03:29.919 --> 0:03:31.840 The margins for that is like fifty percent. 0:03:32.160 --> 0:03:32.840 It's true. 0:03:33.000 --> 0:03:34.560 I was, by the way, I was filling up on 0:03:34.639 --> 0:03:38.160 the way there and back for more than four dollars 0:03:38.200 --> 0:03:39.800 and fifty cents a gallon. 0:03:39.760 --> 0:03:41.320 O because you're putting in the super duper high. 0:03:41.400 --> 0:03:44.680 I go with ninety three, and then I go in 0:03:44.800 --> 0:03:48.240 and I pick up a Snickers bar for my kid brother, 0:03:48.960 --> 0:03:51.160 and I got I don't know, like a TwixT. Each 0:03:51.280 --> 0:03:54.120 of those candy bars was more than two dollars and 0:03:54.160 --> 0:03:55.080 fifty cents. 0:03:55.360 --> 0:03:56.120 That's margin there. 0:03:56.120 --> 0:03:57.760 And I'm starting to feel like a really old man, 0:03:57.920 --> 0:04:01.040 you know, because when I was a kid, fifty cents 0:04:01.120 --> 0:04:02.280 is what you paid for these things. 0:04:02.440 --> 0:04:03.800 So are these good businesses? 0:04:03.960 --> 0:04:07.920 I mean, oh yeah, if they're buying, I'm sure you know. 0:04:08.040 --> 0:04:11.560 They they they think that there's some good business. I mean, 0:04:11.640 --> 0:04:15.520 Kushtart has Usually they they do big acquisitions. The last 0:04:15.520 --> 0:04:19.000 acquisition that they did was for eleven billion dollars for 0:04:19.120 --> 0:04:24.360 the total energy is in the in Europe, but they 0:04:24.480 --> 0:04:29.159 usually in the US they usually buy smaller operators. For example. 0:04:29.200 --> 0:04:31.760 Also this morning they announced that they bought get Go 0:04:31.960 --> 0:04:35.200 from Giant Eagle. So that's another convenience store which is 0:04:35.240 --> 0:04:36.800 in the you know, with. 0:04:36.760 --> 0:04:38.760 The delicious cold pork sandwich by the way. 0:04:38.920 --> 0:04:41.000 Oh well, I actually haven't tried it. 0:04:41.120 --> 0:04:42.880 Yeah, I had one to go this weekend. H where's 0:04:42.880 --> 0:04:45.400 the get go? I had them in Pennsylvania. 0:04:45.520 --> 0:04:47.120 Yeah, it's it's regional. 0:04:47.200 --> 0:04:48.120 Yeah, okay, all. 0:04:48.080 --> 0:04:49.400 Right, it's the Midwest. It's part of the world. 0:04:49.520 --> 0:04:50.039 I don't go to. 0:04:50.200 --> 0:04:52.800 I skipped the what's the one you like the cracker barrel? 0:04:52.880 --> 0:04:56.080 Cracker barrel, I declined, But you probably drove through past 0:04:56.160 --> 0:04:57.159 like one hundred of them month. 0:04:57.120 --> 0:04:58.520 Yes, yes, a lot of that. And I used to 0:04:58.520 --> 0:05:01.120 always stop because you get a books books on tape 0:05:01.279 --> 0:05:04.080 at one and then you'd return it at the next 0:05:05.000 --> 0:05:05.719 But you know, longer. 0:05:05.600 --> 0:05:07.640 What else were seeing in your space than in a 0:05:07.680 --> 0:05:09.200 retail space? What are some of the key things people 0:05:09.200 --> 0:05:10.039 are looking atuse you cover a. 0:05:10.040 --> 0:05:12.919 Lot of retail, Yeah, I mean, obviously, this is like 0:05:13.040 --> 0:05:16.599 the biggest thing that has happened today. 0:05:17.440 --> 0:05:20.360 It's one of the biggest deals of the year, right well, yeah, 0:05:20.360 --> 0:05:22.719 even Dollars puts it like number two. 0:05:23.080 --> 0:05:28.039 Yeah, I mean, obviously the Kruger Albertson's acquisition. It's also 0:05:28.400 --> 0:05:31.040 the talk of the town. There's like likelihood that it 0:05:31.120 --> 0:05:33.200 might not happen. The FDC might object So what. 0:05:33.160 --> 0:05:34.600 Are we going to hear about that deal, because we've 0:05:34.600 --> 0:05:37.080 been talking about Kruger's and Albertson's for a long time. 0:05:37.200 --> 0:05:40.719 Yeah, honestly, like it really depends on, you know, what 0:05:40.880 --> 0:05:46.080 happens with the election and how you know, M and 0:05:46.080 --> 0:05:48.960 A friendly the FDC will be afterwards, all. 0:05:48.920 --> 0:05:50.719 Right, Well, seven to eleven by the numbers, and this 0:05:50.800 --> 0:05:55.720 is according to Bloomberger reporting eighty five thousand stores. That's huge, 0:05:55.760 --> 0:05:57.840 and they've got one hundred and fifty seven thousand employees. 0:05:58.200 --> 0:06:00.680 That's a big business. Yeah, you know cushcharges. 0:06:00.760 --> 0:06:04.039 I mean it's cure Start's got a bigger valuation fifty 0:06:04.040 --> 0:06:07.159 eight billion dollars valuation versus thirty eight for the seven 0:06:07.160 --> 0:06:11.080 and eleven, so much higher valuation using that stock in cash, 0:06:11.120 --> 0:06:12.240 I guess to get bigger. 0:06:12.360 --> 0:06:15.320 Yeah, I think, you know, definitely, I mean, obviously I 0:06:15.360 --> 0:06:18.360 see this as an Asia play, to be honest with. 0:06:18.320 --> 0:06:21.839 You, which we've seen more and more and more of, right, 0:06:21.880 --> 0:06:25.560 I mean, if you look at activists investors involved in 0:06:25.640 --> 0:06:29.559 Japanese stocks, for example, it goes from fifteen and twenty 0:06:29.600 --> 0:06:33.040 twenty two to twenty five last year to twenty eight 0:06:33.120 --> 0:06:35.359 so far this year, and we're only in the first half. 0:06:35.720 --> 0:06:38.599 Yeah, I mean seven eleven has like thirty one percent 0:06:38.640 --> 0:06:40.239 of the Asia Pacific market share. 0:06:40.360 --> 0:06:41.880 So yeah, now we're talking. 0:06:41.920 --> 0:06:45.600 Now we're talking, Diana, Thank you so much for joining us. Diana, Orstopena, 0:06:46.480 --> 0:06:49.240 another one I hired back in today. She's blossomed into 0:06:49.240 --> 0:06:52.560 this great analyst. Very cool to see consumer staples analysts 0:06:52.560 --> 0:06:56.400 Bloomberg Intelligence joining us in the Bloomberg Interactive Broker studio, 0:06:56.640 --> 0:07:00.240 not mailing it in from like Nantucket or dear Value. 0:07:01.680 --> 0:07:02.240 Work from home. 0:07:02.320 --> 0:07:05.520 Yeah, so BI Management, we know what's going on. 0:07:07.160 --> 0:07:11.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:07:11.120 --> 0:07:14.640 weekdays at ten am Eastern on applecar Play and Android 0:07:14.680 --> 0:07:17.840 Auto with the Bloomberg Business. You can also listen live 0:07:17.920 --> 0:07:21.120 on Amazon Alexa from our flagship New York station, Just 0:07:21.160 --> 0:07:23.800 say Alexa play Bloomberg eleven thirty. 0:07:25.160 --> 0:07:28.280 All right, our good friend Carl Icon in the news, 0:07:28.320 --> 0:07:29.920 but I don't think for reasons he wants to be. 0:07:30.000 --> 0:07:34.360 Crystal c joins us Bloomberg US Deals reporter Crystal. What's 0:07:34.360 --> 0:07:36.560 going on with our good friend Carl Icon? He had 0:07:36.600 --> 0:07:37.960 some some issues with the SEC. 0:07:38.040 --> 0:07:41.720 I think, yeah, I think he's probably quite glad about 0:07:41.720 --> 0:07:44.280 today's news This is like coming to an end something 0:07:44.320 --> 0:07:47.280 that's hungover, like hangover his head on its friends for 0:07:47.600 --> 0:07:51.080 a while. Today's news is that Hits firm and him 0:07:51.160 --> 0:07:54.120 are settling a charge with the SEC and paying a 0:07:54.200 --> 0:07:57.520 fine of two million dollars combined. And that is an 0:07:57.640 --> 0:08:01.160 investigation on the back of the Hindenburg recent report from 0:08:01.200 --> 0:08:03.840 twenty twenty three saying that they've inflated some of their 0:08:03.880 --> 0:08:07.679 asset values and quote unquote operate like a ponse scheme. 0:08:07.800 --> 0:08:11.240 So this is actually in some way good news, even 0:08:11.280 --> 0:08:12.960 though the stock doesn't quite reflect that today. 0:08:13.520 --> 0:08:13.720 Yeah. 0:08:13.800 --> 0:08:15.960 No, the stock took a hit I think was last 0:08:16.040 --> 0:08:19.840 year in May when we first learned about these investigations, 0:08:19.880 --> 0:08:25.480 and short sellers started questioning what carl Icon's loans were 0:08:25.520 --> 0:08:28.960 really based on. Does this wrap it up? Is this 0:08:29.040 --> 0:08:31.200 the end of it? 0:08:31.200 --> 0:08:32.560 It looks like the end of it. So there are 0:08:32.559 --> 0:08:34.840 two investigations, if you remember this. One is the SEC 0:08:35.120 --> 0:08:39.200 investigation at settlement. The other one they had previously disclosed 0:08:39.240 --> 0:08:42.839 that they were contacted by the US Attorney's Office, and 0:08:42.960 --> 0:08:45.520 today they put out a statement IEP and I competitive 0:08:45.559 --> 0:08:50.880 statement saying that they haven't received any substantive communication from 0:08:50.920 --> 0:08:55.040 the US Attorney's office since the initial approach, so they, 0:08:55.679 --> 0:08:57.160 I guess you can take it as a good sign 0:08:57.240 --> 0:08:59.920 no news and sometimes good news and off us reporter, 0:09:00.120 --> 0:09:02.880 but for like them. 0:09:03.040 --> 0:09:06.080 You know that fifty dollars company, you know, fifty dollars 0:09:06.120 --> 0:09:09.600 plus and now it's a fifteen dollars company. 0:09:09.720 --> 0:09:11.640 Yeah, all right, and shares it down today as well. 0:09:11.880 --> 0:09:12.760 What's the all right? 0:09:12.800 --> 0:09:14.280 I'm just looking at the stock here, as Matt saying, 0:09:14.280 --> 0:09:16.439 it's down seven percent today, down about eight percent year 0:09:16.480 --> 0:09:17.600 to date, and down thirty. 0:09:17.360 --> 0:09:19.960 Percent over the trailing twelve months. So not a great 0:09:20.000 --> 0:09:21.080 move there, Crystal. 0:09:21.120 --> 0:09:22.960 Thanks so much for joining us, Crystal, see just giving 0:09:23.000 --> 0:09:25.720 us the update there. Carl Icon settling it what is 0:09:25.760 --> 0:09:27.520 for him, I'm sure a very small number, couple of 0:09:27.559 --> 0:09:29.760 million dollars to settle some issues with. 0:09:29.800 --> 0:09:33.800 The se c i EP. Carl Ion is eighty eight 0:09:33.880 --> 0:09:34.280 years old. 0:09:34.520 --> 0:09:37.319 Icon, he's in good shape for eighty eight. That is 0:09:37.360 --> 0:09:40.000 still a very sharp guy. His company, I mean, this 0:09:40.120 --> 0:09:49.000 is a diversified holding company. They hold automotive investments, energy, gaming, railcar, 0:09:49.480 --> 0:09:53.640 food packaging, Marcus real estate, medals, home fashion. 0:09:54.679 --> 0:09:57.200 Market cap seven point five billion dollars. 0:09:58.600 --> 0:10:02.480 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:10:02.559 --> 0:10:05.200 weekdays at ten am Eastern on Effocar. 0:10:04.880 --> 0:10:07.400 Playing Android otto with the Bloomberg Business App. 0:10:07.440 --> 0:10:10.640 Listen on demand wherever you get your podcasts, or watch 0:10:10.720 --> 0:10:12.679 us live on YouTube. 0:10:13.600 --> 0:10:15.840 Matthew Miller sitting in for Al Steel today in our 0:10:15.840 --> 0:10:18.320 Bloomberg Dinner Actor Brokers Studio. We're streaming live on YouTube 0:10:18.400 --> 0:10:20.000 as well as I hit over to YouTube dot com 0:10:20.000 --> 0:10:22.920 and search Bloomberg Podcast and that's where you will find us. 0:10:22.960 --> 0:10:25.679 Green on the screen today. Boy, that two weeks. 0:10:25.360 --> 0:10:28.440 Ago today when we had that big sell off and 0:10:28.480 --> 0:10:31.640 that man fixed jumping above sixty, you know, we got 0:10:31.640 --> 0:10:34.880 the vix back down below fifteen. It's just amazing the 0:10:34.960 --> 0:10:37.760 round trip we've had. So I don't know what to 0:10:37.760 --> 0:10:39.360 make of it, but I think our next guest might. 0:10:39.840 --> 0:10:43.880 Carl Schleife, chief investment officer at a Bimoh Family office, 0:10:44.440 --> 0:10:48.679 joined us via that Zoom thing. Carol, what's your opinion 0:10:48.679 --> 0:10:50.760 on what we've seen over the past couple of weeks again, 0:10:51.160 --> 0:10:53.080 starting with two weeks ago today when we had that 0:10:53.080 --> 0:10:53.800 panic sell off. 0:10:54.920 --> 0:10:58.840 Yeah, it's not necessarily unusual for August to be exceedingly volved. 0:10:58.880 --> 0:11:02.120 All we've got a lot of senior people on the beach, 0:11:02.400 --> 0:11:07.120 and it can very frequently lead to some choppy trading, 0:11:07.240 --> 0:11:10.120 like we saw. It was a little eye popping back then, 0:11:10.160 --> 0:11:12.880 but having lived through the nineteen eighty seven issue, which 0:11:13.280 --> 0:11:16.680 was October, but still did a Friday to Monday, if 0:11:16.720 --> 0:11:18.680 that Monday had been similar, it would have been down 0:11:18.760 --> 0:11:21.400 nine thousand points on the Dow, not just a mere thousand. 0:11:21.440 --> 0:11:24.240 That's great, but. 0:11:24.360 --> 0:11:27.040 It's not unusual at all to see that kind of volatility. 0:11:28.160 --> 0:11:31.440 I actually would have expected it to have to follow 0:11:31.480 --> 0:11:33.800 through for a few days, and I wouldn't write off 0:11:33.880 --> 0:11:38.040 that we're done seeing volatility, especially if we get into 0:11:38.040 --> 0:11:42.679 Friday and people don't like what Paul says in the speech, 0:11:42.880 --> 0:11:45.959 and or we're just in between earnings and now we're 0:11:46.000 --> 0:11:48.680 off a good earning seats and we don't have much 0:11:48.720 --> 0:11:53.240 going until the Fed meets again after this week in September. 0:11:53.400 --> 0:11:56.200 So well, we get to continuing claims out before that, 0:11:56.240 --> 0:11:59.200 and it seems like every little data point has become 0:11:59.440 --> 0:12:03.760 a big event for markets with I guess, you know, 0:12:05.240 --> 0:12:09.720 low volume, that's that's going to happen. But what could 0:12:09.760 --> 0:12:11.800 Powell say that would disappoint. 0:12:13.720 --> 0:12:17.800 If he pushed off the likelihood of a September card, 0:12:17.800 --> 0:12:20.800 because I think most of the expectations are you'll see 0:12:20.800 --> 0:12:23.680 a cut in September. The question is just how much 0:12:24.960 --> 0:12:27.840 twenty five basis points, fifty basis points will he be 0:12:27.880 --> 0:12:33.000 able to structure commentary that actually, FED policy currently is 0:12:33.160 --> 0:12:36.400 very restrictive given where the economic data is coming in. 0:12:36.880 --> 0:12:39.520 And yes, the FED has made us all very data 0:12:39.600 --> 0:12:42.880 dependent and data watchers on every single point trying to 0:12:42.920 --> 0:12:45.240 figure out which way the Fed's going to go. But 0:12:45.320 --> 0:12:47.920 there is a rationale and an ability for the FED 0:12:47.960 --> 0:12:51.119 to be able to say, hey, our policy is restrictive. 0:12:51.160 --> 0:12:53.320 We could actually chunk it down a time or two 0:12:53.480 --> 0:12:56.839 and it wouldn't be indicative of a softening economy. You've 0:12:56.880 --> 0:12:59.560 also got some retail numbers coming out this week which 0:12:59.600 --> 0:13:03.240 people will be watching closely at the biggest retailer report 0:13:03.360 --> 0:13:05.920 last week. And you've also got Nvidia coming out and 0:13:05.960 --> 0:13:08.520 if people don't like that, they haven't knocked it out. 0:13:08.440 --> 0:13:08.880 Of the park. 0:13:09.160 --> 0:13:11.800 Over and above where the expectations are, you could see 0:13:11.800 --> 0:13:14.440 that volatility in the markets in the short run. 0:13:15.040 --> 0:13:17.680 All right, Carol, we've done this round trip over the 0:13:17.679 --> 0:13:18.720 past couple of weeks. 0:13:19.120 --> 0:13:21.280 What do I do now in the equity markets. 0:13:22.080 --> 0:13:25.080 Well, I think you stay invested. Hopefully you were invested 0:13:25.120 --> 0:13:27.080 through all of that and set tight. You know, we 0:13:27.120 --> 0:13:28.400 were advising clients. 0:13:28.880 --> 0:13:29.080 You know. 0:13:29.120 --> 0:13:32.680 The interesting thing is is if you had a diversified portfolio, 0:13:33.320 --> 0:13:36.079 even on that Friday and Monday that were very volatile, 0:13:36.120 --> 0:13:38.320 your bonds did well because the rates came down to 0:13:38.360 --> 0:13:41.120 the bond prices went up, so you had that durability 0:13:41.160 --> 0:13:44.400 built into the portfolio. You also look more broadly at 0:13:44.480 --> 0:13:48.160 things that should benefit if the FED does start to cut, right, 0:13:48.240 --> 0:13:52.000 small caps should benefit, mid cap should benefit. Lots of 0:13:52.000 --> 0:13:55.600 different industries here in the US should continue to benefit. 0:13:55.679 --> 0:13:58.120 And we do suspect that once those rates come down, 0:13:58.559 --> 0:14:03.200 you'll see a consumers continue to spend because they're employed. 0:14:03.280 --> 0:14:07.079 You'll see businesses we suspect spend more than is expected 0:14:07.160 --> 0:14:09.880 right now. And maybe the biggest surprise out there is 0:14:10.160 --> 0:14:13.120 how low that tenure yield is, because we suspect it'll 0:14:13.160 --> 0:14:15.440 drift higher over the intermediate longer term. 0:14:16.240 --> 0:14:18.960 All right, So once the FED, I mean, I guess 0:14:19.000 --> 0:14:20.640 we're all on the same page that they are going 0:14:20.720 --> 0:14:23.920 to cut and buyk So twenty five basis points do 0:14:24.000 --> 0:14:28.120 they continue to do that? Carol? Because we're growing still 0:14:28.160 --> 0:14:32.200 at two and a half plus percent, and unemployment, although 0:14:32.240 --> 0:14:34.720 it ticked up, is still only four point three percent, 0:14:34.800 --> 0:14:39.080 which is very low. Inflation is also well under three 0:14:39.120 --> 0:14:42.080 percent now, which is back to well less than even 0:14:42.120 --> 0:14:46.760 its historical average. So does the Fed really need to 0:14:46.760 --> 0:14:49.080 be moving interest rates around? Why don't they just hold 0:14:49.080 --> 0:14:51.200 tight so that they have more powder left if something 0:14:51.200 --> 0:14:52.840 bad happens. 0:14:52.960 --> 0:14:55.440 They still have an incredible amount of powder if you 0:14:55.520 --> 0:14:57.760 think through that. For ten to fifteen years, they had 0:14:57.800 --> 0:15:01.600 basically no powder because there was zero to zero point 0:15:01.640 --> 0:15:05.520 five percent. They're at five and a quarter five point 0:15:05.560 --> 0:15:10.040 three percent right now, so they've got substantial policy room 0:15:10.240 --> 0:15:12.640 and still leaving policy room even if they brought it 0:15:12.720 --> 0:15:15.440 down one hundred basis points over the next six months 0:15:15.560 --> 0:15:18.920 or so, You've still got got room in there to 0:15:18.960 --> 0:15:21.200 be able to cut if things really did tail off. 0:15:21.440 --> 0:15:23.000 And the last thing they want to do is be 0:15:23.080 --> 0:15:26.560 caught behind the curve too, especially on that employment market, 0:15:26.680 --> 0:15:29.880 because you've seen the momentum tick up there, and granted 0:15:29.960 --> 0:15:33.040 it's from people coming into the market, but one question 0:15:33.120 --> 0:15:35.040 you have for yourself is are they coming into the 0:15:35.080 --> 0:15:39.480 market because of the they're being pinched by inflation? And 0:15:39.520 --> 0:15:40.520 really feel a need. 0:15:41.720 --> 0:15:44.160 Carol, I know in your notes here you've got industrials 0:15:44.200 --> 0:15:46.360 and materials as a couple sectors you're looking at. 0:15:46.520 --> 0:15:49.240 That's not very exciting. Why are you guys looking at that? 0:15:50.360 --> 0:15:51.960 Well, the thing of it is you look at the 0:15:52.040 --> 0:15:54.600 charts on some of those industrials and materials, and they've 0:15:54.640 --> 0:15:57.840 looked the charts actually look a lot like in videos 0:15:57.960 --> 0:16:01.080 chart does in terms of there's a lot of fiscal 0:16:01.160 --> 0:16:04.120 stimulus or a lot of fiscal spending plans still in 0:16:04.160 --> 0:16:07.000 the works. Much of that money has been allocated but 0:16:07.080 --> 0:16:11.000 not necessarily spent, and a lot of that's not necessarily 0:16:11.040 --> 0:16:14.880 going to be pulled back. And the reindustrialization that bringing 0:16:16.200 --> 0:16:18.960 manufacturing back to the United States. A lot of those 0:16:19.000 --> 0:16:22.200 plans are in process, they had to work through local permitting, 0:16:22.440 --> 0:16:24.520 and we don't think they're going to be turned back. 0:16:24.920 --> 0:16:27.560 You've also got infrastructure spent, so there's a lot of 0:16:27.600 --> 0:16:30.880 reasons to think through that. But you've also got the 0:16:30.880 --> 0:16:32.680 notion where if you go back and look over the 0:16:32.760 --> 0:16:36.160 last twenty or thirty years, the industrial component of the 0:16:36.280 --> 0:16:43.040 S and P is shrunk, and given the attention and 0:16:43.080 --> 0:16:47.920 the spending, we're focusing on that sector or those sectors. 0:16:47.960 --> 0:16:51.880 We expect you'll see them expand and perhaps as a 0:16:51.920 --> 0:16:54.400 percentage of the S and P as well as the 0:16:55.440 --> 0:17:00.440 leadership shifts to a more broad group of participating industry. 0:17:02.160 --> 0:17:06.320 Carol, when you look at your portfolio, do you need 0:17:06.320 --> 0:17:09.199 to change anything if Donald Trump wins this election? 0:17:11.000 --> 0:17:15.000 We're feeling pretty comfortable about where the portfolios are, and 0:17:15.080 --> 0:17:17.840 a lot of it would depend on if mister Trump 0:17:17.920 --> 0:17:21.200 wins the election and what does the composition of House 0:17:21.200 --> 0:17:24.120 and Senate look like. So there's a big piece of that, 0:17:24.200 --> 0:17:27.480 and we typically have always advised people not necessarily to 0:17:27.560 --> 0:17:31.080 trade on potential who wins who doesn't. You know, the 0:17:31.359 --> 0:17:34.840 theory have been, for example, that energy stocks should do 0:17:34.880 --> 0:17:38.240 better under Trump presidency than a Biden presidency, but the 0:17:38.240 --> 0:17:42.439 opposite to be the fact. So building sturdy portfolios for 0:17:42.560 --> 0:17:46.160 intermediate long term investment always is the wise and being 0:17:46.200 --> 0:17:49.720 able to adjust your tweak at the margins after we 0:17:49.760 --> 0:17:51.120 see what the outcome is. 0:17:52.680 --> 0:17:52.920 There. 0:17:53.000 --> 0:17:56.320 We might make some adjustments, but most likely not because 0:17:56.359 --> 0:17:58.760 we tend to build really sturdy portfolios and think the 0:17:58.760 --> 0:18:01.680 economy is going to do quite well under either president. 0:18:01.960 --> 0:18:03.679 All right, Carol, thank you so much for joining us 0:18:03.720 --> 0:18:08.560 as always Kyle Schleich, chief investment Officer for Bemo Family Office. 0:18:09.040 --> 0:18:12.920 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:13.000 --> 0:18:16.160 weekdays at ten am Eastern on applecard. 0:18:15.520 --> 0:18:18.280 Play and Android Otto with the Bloomberg Business App. 0:18:18.400 --> 0:18:21.280 You can also listen live on Amazon Alexa from our 0:18:21.280 --> 0:18:26.399 flagship New York station. Just say Alexa Play Bloomberg eleven thirty. 0:18:27.400 --> 0:18:29.960 We've got Matthew Miller sitting in for Alex Steele. 0:18:29.960 --> 0:18:30.120 Here. 0:18:30.119 --> 0:18:32.080 I'm Paul Sweeney. We're live here in our Bloomberg Interactive 0:18:32.080 --> 0:18:34.960 Broker Studio. We're streaming live on YouTube's ahead over to 0:18:35.000 --> 0:18:38.480 YouTube dot com search Bloomberg Podcast, and that's where you 0:18:38.520 --> 0:18:40.560 will find us. Matt you want to talk about evs. 0:18:40.760 --> 0:18:41.680 I would love to. Yeah. 0:18:41.680 --> 0:18:41.920 Okay. 0:18:41.920 --> 0:18:44.160 It's great timing that you're here, because we today we're 0:18:44.160 --> 0:18:45.640 gonna talk a little bit about EV's with our good 0:18:45.640 --> 0:18:49.280 friend Corey Kanter. He's the lead US Electric Vehicle Analyst. Yes, 0:18:49.400 --> 0:18:52.399 there is such a thing. At Bloomberg and New Energy Finance, 0:18:52.480 --> 0:18:53.760 they prefer bn EF. 0:18:53.800 --> 0:18:54.359 I don't care. 0:18:54.920 --> 0:18:55.200 Uh. 0:18:55.359 --> 0:18:57.719 He joins us here on our Bloomberg Interactive Brokers studio. 0:18:58.280 --> 0:19:01.600 Corey give us a state of the market. 0:19:01.680 --> 0:19:04.840 These days about where we are in this long evolution 0:19:05.040 --> 0:19:08.840 from you know, internal combustion engines to getting to an 0:19:08.880 --> 0:19:09.720 all electric world. 0:19:09.760 --> 0:19:12.000 Where kind of are we on that spectrum today? Yeah, 0:19:12.040 --> 0:19:13.600 we're We're in twenty twenty four. 0:19:13.640 --> 0:19:16.000 We're in a bit of i'd say a bumpy moment, 0:19:16.119 --> 0:19:18.200 bumpy first half of the year. If we step back 0:19:18.240 --> 0:19:20.960 and look at twenty twenty three compared to twenty twenty two, 0:19:21.280 --> 0:19:24.240 you saw in the US about fifty percent year on 0:19:24.320 --> 0:19:27.160 year growth for electric vehicles in the US. First half 0:19:27.200 --> 0:19:28.840 of this year, you're looking more at that kind of 0:19:28.840 --> 0:19:31.440 ten to fifteen percent, depending on where you get your numbers. 0:19:32.000 --> 0:19:35.200 We were fifty percent growth last year and we're fifteen 0:19:35.280 --> 0:19:36.040 percent this year. 0:19:36.119 --> 0:19:40.560 So basically, if you take out the largest automaker, Tesla, 0:19:40.600 --> 0:19:42.800 which has had a very difficult first half of this year, 0:19:43.040 --> 0:19:46.040 you're still seeing amongst the automakers, your high endie your 0:19:46.119 --> 0:19:49.600 Ford thirty forty percent year on year growth, more. 0:19:49.440 --> 0:19:51.160 In the trajectory of what we saw last year. 0:19:51.400 --> 0:19:55.040 But Tesla's stagnation and kind of i'd say aging lineup 0:19:55.280 --> 0:19:57.560 has brought down that US average more to that kind 0:19:57.600 --> 0:19:58.760 of ten to twenty percent. 0:19:59.000 --> 0:20:03.840 Well, and elon Trump's pandering love for Elon Musk's pandering 0:20:03.840 --> 0:20:05.800 love for Donald Trump. Did you listen to that interview 0:20:05.840 --> 0:20:07.560 the other day? I think interviews the wrong word. Did 0:20:07.560 --> 0:20:10.720 you listen to that conversation conversation? I mean it was 0:20:10.760 --> 0:20:13.400 pretty crazy. Trump was like, you make great cars, but 0:20:13.560 --> 0:20:17.320 we don't all need electric vehicles, and Musk didn't even 0:20:17.359 --> 0:20:19.160 really go go up against them. 0:20:19.320 --> 0:20:22.280 I saw some clips from the conversation. I think less 0:20:22.320 --> 0:20:25.720 of the overall listening. I'm on Twitter maybe too much, 0:20:25.760 --> 0:20:29.399 but more for sports and less for spaces. With Tesla 0:20:29.480 --> 0:20:32.600 in particular, there's been some challenges in California, as Bloomberg 0:20:32.640 --> 0:20:35.639 News his own down to Hall has covered. You've seen quarter, 0:20:36.000 --> 0:20:39.480 you know, on quarter reduction of overall sales compared. 0:20:39.119 --> 0:20:40.000 To the previous year. 0:20:40.359 --> 0:20:44.280 So Tesla may have a California problem. Actually, my sister 0:20:44.320 --> 0:20:46.320 just got a Tesla Model Why, which continues to be 0:20:46.440 --> 0:20:49.520 the best selling vehicle amongst TVs, and Ludlow. 0:20:49.280 --> 0:20:52.480 Just got one, the co host of Bloomberg Technology, I mean, 0:20:53.400 --> 0:20:56.440 Marian just got one, who runs the makeup room back here. 0:20:56.560 --> 0:20:59.679 It's a hot vehicle in terms of sales, right, but 0:20:59.720 --> 0:21:01.399 it's not I guess, helping the overall number. 0:21:01.720 --> 0:21:04.840 It's also they haven't released a new vehicle excluding the 0:21:04.880 --> 0:21:07.479 cyber truck, which has had very limited production, and all 0:21:07.520 --> 0:21:10.120 of those vehicles over one hundred thousand dollars. That kind 0:21:10.119 --> 0:21:13.320 of expected more affordable Tesla, which you know, if you 0:21:13.359 --> 0:21:14.879 talk to me a year ago, we would have expected 0:21:14.920 --> 0:21:18.239 in twenty twenty five, has been kicked back to you know, 0:21:18.320 --> 0:21:21.040 a couple of years afterwards. Tesla is aiming to introduce 0:21:21.040 --> 0:21:23.320 some low cost models, but I think, just like anything, 0:21:23.320 --> 0:21:24.520 Tesla's a moving target. 0:21:24.880 --> 0:21:27.320 It's pretty low cost. You can get into a model. 0:21:27.359 --> 0:21:27.600 Why. 0:21:27.720 --> 0:21:30.320 I think after all rebates are said and done, for 0:21:30.359 --> 0:21:34.480 about thirty four grand, which you know it's not less 0:21:34.480 --> 0:21:36.200 than thirty I know that's where they want to go, 0:21:36.280 --> 0:21:39.000 but it's near as damn it to it. It's a 0:21:39.000 --> 0:21:42.679 problem though, when the governor of California asks people please 0:21:42.760 --> 0:21:45.639 not to charge your electric vehicles because the grid can't 0:21:45.640 --> 0:21:48.800 handle it, right, I mean, can we really get much 0:21:48.840 --> 0:21:51.720 bigger if we're already warning people not to charge. 0:21:51.960 --> 0:21:54.120 I think I'm a you know, it's going to continue 0:21:54.119 --> 0:21:56.440 to be I think a challenge for electric vehicles in 0:21:56.480 --> 0:21:59.560 this particular year. That being said, California has had a 0:21:59.600 --> 0:22:01.520 lot of batter storage, right and if you look at 0:22:01.560 --> 0:22:04.120 how they're handling their grid, it's completely different than three 0:22:04.200 --> 0:22:08.480 four years ago. Utilities have to get more I think structured. 0:22:08.560 --> 0:22:11.000 I'm more concerned about EV charging on the public side 0:22:11.040 --> 0:22:14.680 compared to the vva G element of it. But sohos California, 0:22:14.720 --> 0:22:17.440 so goes the nation. They've also had a stagnation there 0:22:17.480 --> 0:22:20.200 around twenty five percent EV shriff sale in the first 0:22:20.200 --> 0:22:21.919 half of this year. That's pretty much where they were 0:22:21.960 --> 0:22:23.240 at at the end of last year. 0:22:23.280 --> 0:22:24.680 Really high, Yeah, it is high. 0:22:24.760 --> 0:22:29.360 Are we seeing more chargers put in? I live in Scarsdale, 0:22:29.480 --> 0:22:35.399 and I've had problems with multiple EV charging stations either 0:22:35.480 --> 0:22:38.919 broken or too full. It would make sense to me 0:22:39.040 --> 0:22:41.119 for every gas station owner to just put in a 0:22:41.160 --> 0:22:43.560 couple chargers, but they don't seem to be doing it. 0:22:43.760 --> 0:22:46.040 There is a challenge with what's called demand charges, which 0:22:46.080 --> 0:22:48.360 is then pulling from the grid. It may theoretically sound 0:22:48.440 --> 0:22:50.600 like a great idea, but if you're adding for those 0:22:50.600 --> 0:22:52.800 grid upgrades and those additional costs, it might not be 0:22:52.840 --> 0:22:54.560 worth it for the gas station operator. I think the 0:22:54.600 --> 0:22:56.840 good news is a lot of the federal money hasn't 0:22:56.880 --> 0:22:59.320 been spent. I think there's been a misconception that you know, 0:22:59.359 --> 0:23:02.159 the five billion dollars the nationally V infrastructure program has 0:23:02.160 --> 0:23:04.399 actually gone out. It's gone to states, and they have 0:23:04.440 --> 0:23:07.640 to actually begin to deploy those chargers. So it's it's 0:23:07.680 --> 0:23:10.359 still moving too slow. In terms of the consumer, they 0:23:10.400 --> 0:23:12.280 want to see a charging network that they feel comfortable 0:23:12.280 --> 0:23:14.560 with them. Until you get to that point, you can 0:23:14.640 --> 0:23:16.879 hardly say that it's going well enough. You're also seeing 0:23:16.880 --> 0:23:20.359 this kind of NACS North American Charging Standard transition, the 0:23:20.400 --> 0:23:23.720 Tesla supercharging network that has also been stymied by all 0:23:23.720 --> 0:23:26.200 the firings of that supercharging team. So it's messy and 0:23:26.240 --> 0:23:28.359 bumpy here in the US. I think in terms of 0:23:28.359 --> 0:23:30.600 good news, we can point out the Inflation Reduction Act 0:23:30.640 --> 0:23:33.479 investments beginning to actually come online and bear fruit if 0:23:33.480 --> 0:23:34.400 we want to talk about that too. 0:23:34.520 --> 0:23:37.360 Samantha writes in and says, is hybrid the way to go? 0:23:37.880 --> 0:23:42.159 Oh okay, Well, hybrid hybrids have done well in the 0:23:42.200 --> 0:23:44.359 first half of this year. You're looking at Toyota even 0:23:44.359 --> 0:23:46.639 aiming to go at full hybrid. I think plug in 0:23:46.720 --> 0:23:49.160 hybrids have maybe been overhyped in terms of the kind 0:23:49.160 --> 0:23:50.960 of focus and attention that's when you have both the 0:23:51.000 --> 0:23:54.640 battery electric engine and the kind of gas engine. There's 0:23:54.680 --> 0:23:56.760 not too many models besides the Jeep Wrangler P have 0:23:56.840 --> 0:23:59.760 that does well, so wait and see. I think both 0:24:00.240 --> 0:24:01.840 and hybrid are going to play a major role in 0:24:01.880 --> 0:24:04.480 the US market going forward. I think with plug and hybrid, 0:24:04.560 --> 0:24:05.680 you need them to get a lot better. 0:24:05.760 --> 0:24:05.960 I think. 0:24:05.960 --> 0:24:08.639 I mean, my wife had the Volvo XC nine d T, 0:24:08.880 --> 0:24:10.600 a plug in hybrid for two years. 0:24:10.920 --> 0:24:11.560 Doesn't have anymore. 0:24:11.640 --> 0:24:14.480 That was a lease and we got we got out 0:24:14.480 --> 0:24:17.679 of that lease. But she loved it because for the 0:24:17.720 --> 0:24:20.840 most part she was just around town on electric power 0:24:20.880 --> 0:24:23.040 the whole time. In fact, in the first year that 0:24:23.080 --> 0:24:24.960 we had the car, she only filled it up with 0:24:25.000 --> 0:24:25.679 gas twice. 0:24:25.920 --> 0:24:27.080 Yeah, that's pretty remarkable. 0:24:27.119 --> 0:24:29.439 But is that like a niche use case or I mean, 0:24:29.480 --> 0:24:31.919 I feel like there's a lot of suburban that's. 0:24:31.760 --> 0:24:34.840 Probably the idealized use case right of a smart PEF driver. 0:24:35.200 --> 0:24:37.120 And I think when we've done our reports and analysis 0:24:37.160 --> 0:24:39.480 on pvs, just as you have the more savvy BEV 0:24:39.560 --> 0:24:42.480 drivers battery electric vehicle drivers to you know, the more 0:24:42.520 --> 0:24:45.240 mass market, it doesn't mean that future PF drivers would 0:24:45.280 --> 0:24:47.280 would drive that way. They might just say, oh, we're 0:24:47.280 --> 0:24:48.719 going to fill it up with gas because we're used 0:24:48.720 --> 0:24:51.240 to it with the hybrid experience. What we want to 0:24:51.280 --> 0:24:53.920 see more of is in China, the all electric mode 0:24:54.000 --> 0:24:57.040 is about twice the volume weighted average all electric mode 0:24:57.040 --> 0:24:58.320 here in the US. So you want to see more 0:24:58.320 --> 0:25:01.520 of those kind of like Toyota, you have ranged fifty 0:25:01.520 --> 0:25:04.439 miles forty miles less of this like eighteen because then 0:25:04.480 --> 0:25:06.080 are you really going to fill it up on electric. 0:25:06.359 --> 0:25:10.879 My favorite hybrid that I've test driven recently for my podcast, 0:25:11.040 --> 0:25:13.600 which is called Hot Pursuit exactly. You can download that 0:25:13.640 --> 0:25:15.880 on Bloomberg dot com or wherever your podcast. 0:25:15.920 --> 0:25:16.240 Of course. 0:25:16.600 --> 0:25:20.040 I drove the Corvette E Ray really, which has the 0:25:20.080 --> 0:25:22.840 six point two liters V eight behind you and an 0:25:22.920 --> 0:25:28.120 electric motor on the front axle, and that eliminates any 0:25:28.200 --> 0:25:30.680 kind of lag that you might get, like zero to ten. 0:25:30.840 --> 0:25:33.000 So as a result, six hundred and fifty five host 0:25:33.040 --> 0:25:35.040 power zero to sixty and two and a half seconds. 0:25:35.200 --> 0:25:37.400 Wow, how often you need to do that? Of course? 0:25:37.600 --> 0:25:39.280 Cory Canter, thanks so much for joining US. 0:25:39.359 --> 0:25:43.000 Corey Canter, lead US Electric Vehicle analyst at BNF. 0:25:44.359 --> 0:25:45.159 He's still talking. 0:25:45.520 --> 0:25:47.640 I'm not going there, but these guys can go out 0:25:47.640 --> 0:25:49.200 and talk about it all they want, you know, but 0:25:49.359 --> 0:25:50.840 maybe I'll go hybrid at some point. 0:25:51.040 --> 0:25:53.600 I think it's the way to go. I think it's 0:25:53.600 --> 0:25:55.879 the way forward for now, until we deal with the 0:25:55.880 --> 0:25:58.960 grid and the charging issues. You know, depends on your 0:25:59.000 --> 0:25:59.920 specific use case. 0:26:00.000 --> 0:26:01.280 You're not driving the Volvo anymore. 0:26:01.760 --> 0:26:05.080 Way, No, we switched over to uh. I'm actually I 0:26:05.119 --> 0:26:07.159 wish we'd kept it. I'm a little bit disappointed. 0:26:07.200 --> 0:26:08.480 All right, we have to figure that out. 0:26:10.040 --> 0:26:13.960 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:26:14.040 --> 0:26:17.520 weekdays at ten am Eastern on applecar Play and Android 0:26:17.560 --> 0:26:20.359 Auto with the Bloomberg Business app. You can also listen 0:26:20.440 --> 0:26:23.560 live on Amazon Alexa from our flagship New York station, 0:26:23.920 --> 0:26:27.640 just say Alexa playing Bloomberg eleven thirty. 0:26:28.480 --> 0:26:30.760 We're here in our Bloomberg Interactive Broker Studio. We're streaming 0:26:30.760 --> 0:26:33.639 live on Youtubes. To head over to that internet thing YouTube, 0:26:33.680 --> 0:26:35.960 dot com search Bloomberg Podcast and that's where you find us. 0:26:36.080 --> 0:26:39.000 We have a season professional like a trader investor, like 0:26:39.040 --> 0:26:41.040 a person who does this stuff for a living, in 0:26:41.160 --> 0:26:44.760 studio Frank Moncam Senior Portfolio Manager and Timo in our 0:26:44.760 --> 0:26:46.720 Bloomberg Interactive Broker Studio. 0:26:47.520 --> 0:26:49.000 Frank, what are you doing? In this market. Where do 0:26:49.080 --> 0:26:50.760 you see opportunities today? 0:26:50.760 --> 0:26:52.840 I mean, I got the FEDS going out to Wyoming 0:26:52.960 --> 0:26:54.960 or something and they're gonna have some economists out there. 0:26:55.400 --> 0:26:58.399 What do you how are you approaching this market these days? 0:26:58.480 --> 0:27:02.119 Well, thanks thanks for having me on today. You know, 0:27:02.160 --> 0:27:05.199 I think that you know, the FED here is is 0:27:05.359 --> 0:27:08.159 probably getting everything he needs here to be able to 0:27:08.200 --> 0:27:11.160 pivot a little bit into into the easing cycle. We 0:27:11.160 --> 0:27:13.439 were looking at is just trying to be mindful of 0:27:13.440 --> 0:27:17.200 the volatility. It's still plague in markets here. I mean, 0:27:17.240 --> 0:27:20.520 we get into this Jackson Hole meeting at the end 0:27:20.520 --> 0:27:22.520 of the week with a FED that's basically going to 0:27:22.560 --> 0:27:25.280 look at you know, what's going on in finishing conditions, 0:27:25.400 --> 0:27:28.399 right obviously we know to September rate cut that's not 0:27:28.520 --> 0:27:32.280 baked ten and for for for obvious reasons, in plats 0:27:32.320 --> 0:27:35.240 come down. We've seen this decceleration and growth. You know, 0:27:35.280 --> 0:27:37.200 we had a little bit of an NFP scare here, 0:27:38.119 --> 0:27:40.560 but you know, we got we got to remind remind 0:27:40.560 --> 0:27:42.560 ourselves that this market has been super bowl though in 0:27:42.680 --> 0:27:45.520 terms of pricing. You know, the easing cycle. We went 0:27:45.560 --> 0:27:47.840 from seven cuts in the first quarter yeh to about 0:27:47.880 --> 0:27:49.280 three and a half. I mean it was five and 0:27:49.320 --> 0:27:52.480 a half two weeks ago. You know, I think one 0:27:52.480 --> 0:27:54.639 thing I really want to watch is the FED is 0:27:54.680 --> 0:27:56.920 really not going to you know, come out with anything 0:27:56.960 --> 0:27:59.480 really decisive as far as the pace of right cuts 0:27:59.480 --> 0:28:01.960 between nine end of the year. But it's mostly there 0:28:02.080 --> 0:28:06.359 the tone with which they describe the current environment. So 0:28:06.400 --> 0:28:09.120 what I want to keep my eyes on really is UH, 0:28:09.160 --> 0:28:12.359 what they're going to say about UH financial conditions easing 0:28:12.880 --> 0:28:16.560 UH and potentially our star right and you know, it's 0:28:16.600 --> 0:28:19.040 it's it's really one of those things where in terms 0:28:19.040 --> 0:28:20.639 of what we're seeing in the markets and how we 0:28:20.680 --> 0:28:23.199 should be positioning with with this spread meeting and and 0:28:23.240 --> 0:28:25.639 also the d n C. Right, there's there's there's a 0:28:25.680 --> 0:28:29.080 couple of vital catalysts that are on that kind of 0:28:29.080 --> 0:28:32.400 this week. It's it's really to think about the fact 0:28:32.440 --> 0:28:36.040 that we're at a very liquid, you know market right now. 0:28:36.400 --> 0:28:38.880 I was joking with friends of the weekend saying, you know, 0:28:39.160 --> 0:28:42.000 the liquidity has migrated away from capital markets into into 0:28:42.080 --> 0:28:44.840 rose and at this time of the. 0:28:44.840 --> 0:28:45.640 Year, it's typical. 0:28:46.360 --> 0:28:50.200 So you know, the the the NFB print print for 0:28:50.200 --> 0:28:53.000 for August is going to be very critical. My my, my, 0:28:53.160 --> 0:28:55.600 view in this market is that the way that we've 0:28:55.640 --> 0:28:59.000 seen the Vics kind of retrace so quickly, to me, 0:28:59.040 --> 0:29:01.320 it's not really a sign a healthy market. So I 0:29:01.360 --> 0:29:04.640 continue to want to be watchful of volatility ahead of 0:29:04.680 --> 0:29:08.160 us with the election cycle, with a geopolitical cycle, and 0:29:08.600 --> 0:29:12.080 I think with the Vicks having collapsed basically from sixty 0:29:12.120 --> 0:29:15.680 five to about sub fifteen today, I think it's an 0:29:15.680 --> 0:29:18.240 opportunity to look for some downslaw protection again as we 0:29:18.280 --> 0:29:18.920 get into the fall. 0:29:19.040 --> 0:29:21.520 You know, Frank, you mentioned that sort of typical August 0:29:21.800 --> 0:29:24.760 liquidity problem that we've run into a million times before. 0:29:24.960 --> 0:29:27.320 Paul and I were talking about it before. Is that 0:29:27.400 --> 0:29:30.640 the main story of that correction we saw from you know, 0:29:30.680 --> 0:29:33.479 the first half of August that in the carry trade. 0:29:33.680 --> 0:29:34.920 Was there anything else more there? 0:29:35.040 --> 0:29:36.960 Do you think, you know, we're back almost. 0:29:36.720 --> 0:29:39.400 To where we were before that that really nasty sell off. 0:29:39.600 --> 0:29:42.000 Yeah, I think definitely. I mean it had to do 0:29:42.080 --> 0:29:44.080 with it. But I also think that, you know, I've 0:29:44.120 --> 0:29:46.040 been on the record saying that you know, you know, 0:29:46.120 --> 0:29:48.640 protection was really really cheap. I thought volatility was cheap. 0:29:48.680 --> 0:29:52.280 I thought, you know, skew was really cheap. It did materialize, 0:29:52.280 --> 0:29:54.480 it was shortly, but it did materialize. But to your point, 0:29:54.760 --> 0:29:56.400 I think there's also the fact that the market is 0:29:56.440 --> 0:29:59.479 really over extending to the to the to the upside 0:29:59.520 --> 0:30:02.840 in terms of positioning, right, I mean, positioning was super overstretched, 0:30:03.400 --> 0:30:06.240 not just for the broader market, but also for you know, 0:30:06.280 --> 0:30:10.000 within the mega megacap tech sector. And you know, whenever 0:30:10.040 --> 0:30:12.320 you get you get to these levels, even with a 0:30:12.360 --> 0:30:14.840 bullish market, you're kind of due for a bit of 0:30:14.840 --> 0:30:18.120 a of correction. And and it's funny when the market 0:30:18.200 --> 0:30:21.280 is is really overextended on technicals, which was the case, 0:30:21.320 --> 0:30:24.640 because positioning is a technical indicator. All it takes is 0:30:24.720 --> 0:30:28.240 just one little technical place to happen for things to unravel. 0:30:28.400 --> 0:30:30.760 And I think that's what took place in addition to 0:30:31.040 --> 0:30:35.800 you know the obviously the the the GPUI carry onlind 0:30:36.240 --> 0:30:38.560 and and also just you know, the SAM rule has 0:30:38.640 --> 0:30:40.320 has been triggered for a for a lot of augos 0:30:40.320 --> 0:30:43.360 out there that that trade around these types of signals. 0:30:43.520 --> 0:30:45.400 I mean, all these things kind of all happened at 0:30:45.440 --> 0:30:48.280 the same time and in a period of time where 0:30:48.280 --> 0:30:50.320 the liquidity is very thin, So you know, I think 0:30:50.360 --> 0:30:51.640 it made a lot of sense for the market to 0:30:51.640 --> 0:30:52.479 pull back the way it did. 0:30:52.640 --> 0:30:55.720 How about on the commodities. I mean a lot of 0:30:55.720 --> 0:30:57.680 people to say buy gold and short everything else. What 0:30:58.640 --> 0:31:00.520 I mean, you know, Mike McGall and I'm coding. 0:31:00.880 --> 0:31:05.200 Yeah, sure, yeah, Mike, Mike's Mike's a front I you know, 0:31:05.520 --> 0:31:07.640 I it's hard to disagree with that, right, I mean, 0:31:07.680 --> 0:31:09.880 when you look at the commodities complex where we are 0:31:09.960 --> 0:31:13.440 right now, when you look at things like oil and copper, 0:31:13.640 --> 0:31:15.640 you're still getting a lot of mixed signals. You know, 0:31:15.760 --> 0:31:18.479 for the take the case of oil for instance, you know, 0:31:18.560 --> 0:31:21.120 we we've we've got we've stayed into this range on 0:31:21.240 --> 0:31:23.960 let's use brent as a as a benchmark, between seventy 0:31:23.960 --> 0:31:27.080 five and ninety dollars a bow, and you can you 0:31:27.120 --> 0:31:30.560 can clearly see that it's it's it's it's a range 0:31:30.600 --> 0:31:34.760 that's that's been basically kept intact because you've got offsetting caalysts. 0:31:34.840 --> 0:31:36.440 So it's really market that's really. 0:31:36.240 --> 0:31:36.800 Hard to read. 0:31:37.200 --> 0:31:38.800 On the one side, you don't really want to short 0:31:38.840 --> 0:31:43.480 it because there's a cycular shortage of investment and crewd 0:31:43.520 --> 0:31:46.240 and all that stuff. But it's cyclical, is really fair 0:31:46.320 --> 0:31:49.480 fairly bearish, to be honest with you, And you know, opek, 0:31:49.520 --> 0:31:52.080 Now the OPEC put to me, is getting softer and 0:31:52.120 --> 0:31:55.080 softer and moving lower and lower. I think the Saudis 0:31:55.120 --> 0:31:56.720 need cash. I mean there's a little bit of a 0:31:56.760 --> 0:31:59.360 fiscal distress in Saudi's right now. I mean they've run 0:32:00.400 --> 0:32:02.760 they've only run a fiscal surplus, you know one of 0:32:02.840 --> 0:32:04.960 the last ten years, says a lot. So for them 0:32:05.000 --> 0:32:07.479 now it's it's no longer trying to fight you know, 0:32:07.680 --> 0:32:09.920 the the you know, the flat price as much as 0:32:09.920 --> 0:32:12.040 they used to. But when we look at the market 0:32:12.080 --> 0:32:13.960 like gold, you know, it's really all starts, you know, 0:32:14.040 --> 0:32:16.120 being online. You know, there's there's I think there's additional 0:32:16.120 --> 0:32:19.600 momentum here with central banks continue to buy. You know, 0:32:19.640 --> 0:32:22.520 this Chinese I'm hearing are kind of looking for a 0:32:22.520 --> 0:32:23.960 little bit of a pull back, you know, ten to 0:32:24.000 --> 0:32:28.120 fifteen percent to probably add add more, you know, the 0:32:28.400 --> 0:32:31.040 PBOC that is, which is the main buyer in this market. 0:32:31.120 --> 0:32:33.200 So you know, gold looks really really good, and only 0:32:33.280 --> 0:32:35.719 thing there it's it's it's a bit it's a slightly 0:32:35.760 --> 0:32:38.280 overextended to be upside, but there could be momentum there. 0:32:38.360 --> 0:32:41.480 So I think the strategy really in commodities is I 0:32:41.520 --> 0:32:44.640 would want to ride this momentum and and you know, 0:32:44.680 --> 0:32:46.880 potentially it keeps on dry powder on the side to 0:32:46.880 --> 0:32:49.760 add on dips and also just just continue to look 0:32:49.800 --> 0:32:52.840 for a relative value of dis locations within commodities. You know, 0:32:52.920 --> 0:32:57.400 you know oil versus gold as in bullish bullish gold 0:32:57.640 --> 0:32:59.440 kind of bearish or oil. There is these kind of 0:32:59.520 --> 0:33:04.160 RB plays, and you know gold versus copper also. Yeah, 0:33:04.280 --> 0:33:06.920 so you know, I think I think oil gold here 0:33:07.040 --> 0:33:10.600 is the you know, the main game in town, and 0:33:11.400 --> 0:33:13.600 the way to play really is to perhaps look for 0:33:13.640 --> 0:33:15.920 dips and look for ob players versus other commodities. 0:33:16.120 --> 0:33:16.280 Yeah. 0:33:16.560 --> 0:33:18.320 To get back to the FED for a minute, you know, 0:33:18.320 --> 0:33:21.000 I'm looking at our world interest rate probability function. It 0:33:21.080 --> 0:33:24.520 basically just susses out how many interest rate cuts the 0:33:25.160 --> 0:33:27.080 Fed funds futures traders are expecting. 0:33:27.440 --> 0:33:30.480 It's look at it, like three and a half, maybe 0:33:30.600 --> 0:33:33.120 almost four cuts this morning. 0:33:33.240 --> 0:33:34.880 Yeah, yeah, by the end of you know, and we 0:33:34.960 --> 0:33:37.680 only have three meetings coming up, so that's even thinking 0:33:37.720 --> 0:33:40.120 people are thinking we'll get a fifty basis points at 0:33:40.160 --> 0:33:42.320 one of them, I guess. But what's the risk there, 0:33:42.360 --> 0:33:45.000 I mean, is the is the market in Fed fund's 0:33:45.040 --> 0:33:49.000 futures just bracing for more bad eco news? And is there, 0:33:49.320 --> 0:33:50.760 you know, a risk one way or the other that 0:33:50.800 --> 0:33:51.600 they'll get this wrong. 0:33:52.400 --> 0:33:55.400 Yeah, I you know, I thought five and a half 0:33:55.480 --> 0:33:58.120 cuts two weeks ago was over stretched. In fact, we're 0:33:58.120 --> 0:33:59.720 we're kind of we kind of took the other side 0:33:59.720 --> 0:34:01.160 of that, which is worked out so far. I mean 0:34:01.200 --> 0:34:03.720 we're down to three point eight that's roughly almost four 0:34:03.760 --> 0:34:06.720 cuts between and the end of the year. I think 0:34:06.880 --> 0:34:11.319 the real wager here is around the August jobs data. 0:34:11.680 --> 0:34:14.080 Right if we were to break the one hundred k 0:34:15.000 --> 0:34:18.160 jobs mark and the unemployment rate to take up maybe 0:34:18.239 --> 0:34:20.360 to four point four percent or four point five percent, 0:34:20.800 --> 0:34:24.080 and I think, you know, there's a chance that we 0:34:24.160 --> 0:34:27.920 could get a fifty basis point cut in September. And 0:34:28.000 --> 0:34:29.879 I think what the market is really getting at here 0:34:30.000 --> 0:34:31.920 is that if we get fifty in September, we're probably 0:34:31.920 --> 0:34:33.400 going to get fifty on the next one because the 0:34:33.480 --> 0:34:35.440 Fed then realizes that maybe it's a little bit of 0:34:35.440 --> 0:34:37.760 mind curve. So I think this whole wager is around 0:34:38.560 --> 0:34:44.360 this August NFP, which my my view on that is 0:34:44.840 --> 0:34:46.680 based on the seasonality of the data. I think the 0:34:46.760 --> 0:34:49.560 July print could could easily have been it could have 0:34:49.640 --> 0:34:52.120 easily been a bit of a an out liar here 0:34:52.160 --> 0:34:53.600 because of seasonality right. 0:34:55.120 --> 0:34:57.839 In Houston to correct, and then some of the heat waves. 0:34:57.880 --> 0:34:59.920 There's been a lot of you know, activities being canceled 0:35:00.040 --> 0:35:01.839 in the summer because of heat waves in a couple 0:35:01.840 --> 0:35:04.360 of states. So that's all playing into that. So I 0:35:04.440 --> 0:35:06.200 think it's one of those things where it could be 0:35:06.400 --> 0:35:08.919 kind of almost binary, where we either get the fifty 0:35:08.960 --> 0:35:10.800 to fifty twenty five, which gets you to the to 0:35:10.880 --> 0:35:13.680 the what you know, what works is w rb S 0:35:13.719 --> 0:35:15.680 pricing right now, or we might even get to a 0:35:15.719 --> 0:35:17.680 point where we only get one or two cuts, right. 0:35:17.920 --> 0:35:19.319 It could be one of those things where it's kind 0:35:19.320 --> 0:35:22.000 of if if we realize July was a blip and 0:35:22.080 --> 0:35:23.400 we get it one, we might get it one and 0:35:23.520 --> 0:35:26.520 done with. I FED just makes an adjustment cuts because 0:35:26.520 --> 0:35:28.399 I think this thing is super telegraphed. They can't really 0:35:28.480 --> 0:35:30.880 backtrack on the September cut. I think it was spoop markets, 0:35:31.640 --> 0:35:33.320 which is not what the FED wants to do. So 0:35:33.360 --> 0:35:35.279 I think it might just deliver a twenty five and 0:35:35.360 --> 0:35:38.279 kind of wait and see post election if that's if 0:35:38.320 --> 0:35:42.440 we get a strong or decent NFB, you know in 0:35:42.520 --> 0:35:43.000 the early. 0:35:43.239 --> 0:35:46.759 So no taking off on the Friday's payroll day. No, 0:35:48.560 --> 0:35:50.719 no summer Friday. Summer Fridays are over. 0:35:51.080 --> 0:35:53.480 I'm for me, all right, Frank, thanks so much for 0:35:53.600 --> 0:35:55.920 joining us. Frank Monham, he's a senior portfolio manager and 0:35:55.960 --> 0:35:57.839 then team off. This whole money management thing doesn't work 0:35:57.840 --> 0:36:00.359 after you you get a voice for radio. I mean 0:36:00.400 --> 0:36:03.000 that's like, I mean incredible. I just told my producer, 0:36:03.040 --> 0:36:04.319 let's get this guy in right. 0:36:05.840 --> 0:36:08.680 In our Bloomberg Interactive Brokers studio. We appreciate getting some 0:36:08.760 --> 0:36:09.160 of his time. 0:36:10.680 --> 0:36:14.520 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:36:14.640 --> 0:36:17.560 weekdays at ten am Eastern on Apple card Play and 0:36:17.680 --> 0:36:20.919 Android Otto with the Bloomberg Business. You can also listen 0:36:21.080 --> 0:36:24.160 live on Amazon Alexa from our flagship New York station 0:36:24.560 --> 0:36:27.279 Just Say Alexa playing Bloomberg eleven thirty. 0:36:28.520 --> 0:36:30.839 Paul Swynn here and Michael Reagan sitting and for Alex 0:36:30.880 --> 0:36:35.680 Steele said, day, Stay Lauder, el's a ticker symbol. Stocks 0:36:35.719 --> 0:36:38.799 down like thirty five percent that year to date turnaround 0:36:39.040 --> 0:36:42.080 change in management. Red Brown Joints earnings reporter for Bloomberg News, 0:36:42.440 --> 0:36:43.799 read what's going on with that stay Launder? 0:36:44.000 --> 0:36:44.200 Yeah? 0:36:44.200 --> 0:36:47.320 I think today you know, the highest level is just 0:36:47.400 --> 0:36:49.280 like this is a clean slate I think for this company. 0:36:49.400 --> 0:36:52.520 We saw obviously CEO stepping away at the end of 0:36:52.560 --> 0:36:55.919 this year. CFO is actually also leaving on the same time, 0:36:56.000 --> 0:36:58.080 so you know, a new management team. And also if 0:36:58.120 --> 0:36:59.600 we look at the guidance that they gave out for 0:36:59.600 --> 0:37:02.400 their fist with twenty twenty five today, it came in 0:37:02.920 --> 0:37:05.319 much lower than what an elks we're expecting and else 0:37:05.320 --> 0:37:08.240 we're expecting to see constant currency growth. They were expecting 0:37:08.239 --> 0:37:11.200 to see earnings about the whole dollar higher than what 0:37:11.320 --> 0:37:13.960 the company guided for. So again just kind of setting 0:37:14.280 --> 0:37:16.920 a low bar for this company going forward, clean slate, 0:37:17.400 --> 0:37:18.759 let's go from here, I think is kind of the 0:37:18.840 --> 0:37:21.480 message that they're going to be trying to change the 0:37:21.560 --> 0:37:22.680 narrative to going forward. 0:37:23.560 --> 0:37:26.040 Red How big of a deal is China to Estay Lauder. 0:37:26.080 --> 0:37:28.000 I know they have a pretty decent sized business. There 0:37:28.160 --> 0:37:30.960 was that part of the sort of disappointing results this quarter. 0:37:31.120 --> 0:37:33.600 Yeah, I mean, I think that is the main culprit 0:37:33.800 --> 0:37:35.920 of the issues that they're they're going through. I mean, 0:37:35.960 --> 0:37:38.600 we've seen throughout this earning season a lot of these companies, 0:37:38.719 --> 0:37:40.840 especially in the luxury space, that have tied their fortunes 0:37:40.880 --> 0:37:44.120 to China are paying the price of that at the moment. 0:37:44.200 --> 0:37:47.600 So China came in really soft again this quarter and 0:37:47.600 --> 0:37:50.080 als we're expecting for around three or four percent growth 0:37:50.200 --> 0:37:52.640 in the Asia region, which is dominated by China obviously, 0:37:52.960 --> 0:37:55.520 and what they saw was a four percent contraction in 0:37:55.640 --> 0:37:58.840 that market. So yeah, again paying the paying the price 0:37:59.000 --> 0:38:05.200 for the investment in that region. As China sales demand 0:38:05.280 --> 0:38:09.600 for these luxury products, whether it's LVMH's goods or you know, fashion, 0:38:09.760 --> 0:38:12.759 anything like that. And then also skincare, fragrance, things like 0:38:12.800 --> 0:38:15.879 that are also weak as the demand waivers there. 0:38:16.239 --> 0:38:18.800 Just reading some of the reporting on this here company 0:38:19.160 --> 0:38:21.280 in the midst of a turnaround, I'm not sure necessarily 0:38:21.280 --> 0:38:22.640 what it has to be turned around, but the stock's 0:38:22.680 --> 0:38:25.239 down thirty five percent, so that tells me that a 0:38:25.360 --> 0:38:27.160 year to date, So that tells me whatever they're doing 0:38:27.200 --> 0:38:27.719 ain't working. 0:38:28.160 --> 0:38:30.480 So when you get it, presumably a new management team 0:38:30.520 --> 0:38:30.759 coming in. 0:38:30.840 --> 0:38:33.920 Do they want somebody from inside or maybe some fresh 0:38:34.120 --> 0:38:36.080 set of eyes coming from the outside. 0:38:36.120 --> 0:38:36.920 What's the thinking there? 0:38:37.200 --> 0:38:41.360 I think you know, both the CEO CFO have been 0:38:41.400 --> 0:38:44.279 there for over a decade now, so I mean it's 0:38:44.280 --> 0:38:46.480 always good to have somebody within the company knows the company, 0:38:47.480 --> 0:38:49.720 but it might be time for some fresh eyes. 0:38:50.520 --> 0:38:51.239 The company has. 0:38:51.200 --> 0:38:54.160 Missed guidance or cut guidance several times over the last 0:38:54.719 --> 0:38:57.800 few years. Analysts start to get when that happens, analysts 0:38:57.840 --> 0:39:00.360 starts to feel they starts to lose comp It's in 0:39:00.680 --> 0:39:04.759 in that management group's ability to understand or grapple with 0:39:04.840 --> 0:39:07.920 the business dynamics at the moment. So I think there 0:39:07.960 --> 0:39:09.879 could be some calls for an outside look. The company 0:39:09.920 --> 0:39:14.120 says they're already undertaking the next CEO search. Obviously they're 0:39:14.120 --> 0:39:16.800 going to say they're they're considering internal and external candidates. 0:39:16.840 --> 0:39:19.239 But yeah, definitely might be time for a for a 0:39:19.320 --> 0:39:19.839 fresh look. 0:39:20.400 --> 0:39:23.279 I'm smirking here a little bit looking back on a 0:39:23.480 --> 0:39:26.839 story we had out in February on Esta Lauter, where 0:39:27.280 --> 0:39:33.399 CEO Fabrizio Freda said, I'm not going anywhere precedent, but Red, 0:39:33.480 --> 0:39:34.920 you know, I don't know how much of an expert 0:39:34.960 --> 0:39:38.160 you are on the beauty care market and skincare, but 0:39:38.840 --> 0:39:41.080 you know, are they an outlier here? As far as 0:39:41.360 --> 0:39:43.799 you know, you go through a million earnings reports every 0:39:43.880 --> 0:39:45.960 quarter year? Are they are they an outlier as far 0:39:46.080 --> 0:39:50.320 as that you know, consumer discretionary space or are we 0:39:50.400 --> 0:39:53.720 seeing similar stories from other you know, companies that depend 0:39:54.160 --> 0:39:57.040 on I don't know whether it's beauty care or you know, 0:39:57.719 --> 0:40:00.680 high fashion, you know, is is there. 0:40:00.600 --> 0:40:01.160 A theme here? 0:40:01.320 --> 0:40:02.640 I don't know what gave it away that I'm not 0:40:02.719 --> 0:40:07.640 ANX but you have good skin. No, I don't think 0:40:07.640 --> 0:40:11.000 they're an outlier. Look, I think it's you see something 0:40:11.080 --> 0:40:12.719 for me. The similar trend that I'm picking up across 0:40:12.760 --> 0:40:14.440 all of the retail, even you know, something as far 0:40:14.640 --> 0:40:18.240 away as home depot is that people are focused on needs, 0:40:18.320 --> 0:40:22.280 not once and this luxury space skincare especially. 0:40:22.680 --> 0:40:24.080 Is a want, it's not a need. 0:40:24.160 --> 0:40:26.840 A fragrance is a want, not a need. So consumers 0:40:26.840 --> 0:40:29.400 are cutting back where they can, whether it's you know, 0:40:30.000 --> 0:40:32.520 fixing your house up or yeah, making yourself appear a 0:40:32.560 --> 0:40:35.960 little bit better, it doesn't matter. That's that's kind of 0:40:36.040 --> 0:40:38.400 the the macro pressure is gonna win out in this 0:40:38.680 --> 0:40:39.600 this this this scenario. 0:40:39.960 --> 0:40:43.440 But as our good friend Samantha writes in Alex Steele 0:40:43.480 --> 0:40:46.040 has always told us that you have to invest in 0:40:46.120 --> 0:40:49.560 your face, which she does and Michael John Tucker and 0:40:49.600 --> 0:40:50.080 I do not. 0:40:50.600 --> 0:40:53.359 So I mean, clearly, my face is a value stock 0:40:54.120 --> 0:40:54.400 right now. 0:40:55.360 --> 0:40:59.160 But all I know is during the lockdown across the street, 0:40:59.239 --> 0:41:00.399 the Spore store packed. 0:41:00.960 --> 0:41:03.680 Yeah, I mean, no matter what, people need to get 0:41:03.840 --> 0:41:05.000 that stuff. 0:41:05.239 --> 0:41:07.319 Yeah, I mean, I guess in the pandemic people had 0:41:07.320 --> 0:41:10.320 a few extra bucks they weren't spending on concerts and movies. 0:41:10.400 --> 0:41:14.200 It was just it shocked me how strong that category is. 0:41:14.520 --> 0:41:16.480 Yeah, and then right after the pandemic as well, they 0:41:16.480 --> 0:41:18.120 did really well because people were like, I'm. 0:41:18.080 --> 0:41:18.919 Emerging from the world. 0:41:19.000 --> 0:41:21.320 I want to make sure, Yeah, I haven't shaped my 0:41:21.360 --> 0:41:24.120 face in six months, I might as well get moisturized 0:41:24.200 --> 0:41:24.520 or something. 0:41:24.560 --> 0:41:25.520 But yeah, it's there. 0:41:25.680 --> 0:41:28.520 There's trends have just fallen off now and they haven't 0:41:28.560 --> 0:41:30.160 really returned to like pre pandemic. 0:41:29.920 --> 0:41:30.520 Levels of growth. 0:41:30.520 --> 0:41:31.920 You know, excuse me. 0:41:32.200 --> 0:41:34.200 Este later was a was a company that was like 0:41:34.320 --> 0:41:37.040 really you know, flying into the pandemic and through the pandemic. 0:41:37.600 --> 0:41:39.640 And then yeah, just the the fall off of China 0:41:39.680 --> 0:41:42.000 and then the United States as well is kind of 0:41:42.120 --> 0:41:43.759 not getting a lot of attention at the moment. But 0:41:43.880 --> 0:41:46.399 like US sales contracted as well this quarter. It's maybe 0:41:46.480 --> 0:41:49.000 hidden because there's been so much emphasis on China. Yeah, 0:41:49.120 --> 0:41:50.799 but those are the two biggest markets and both are 0:41:50.880 --> 0:41:52.680 are are underperforming I think at the moment. 0:41:52.800 --> 0:41:56.360 So it still seems like China's consumer economy is a 0:41:56.400 --> 0:41:59.000 bit of a black box to analyst, Do you find 0:41:59.040 --> 0:42:01.920 a lot of surprise is either upside or downside on 0:42:02.080 --> 0:42:04.799 companies as far as their their business in China goes. 0:42:04.920 --> 0:42:06.560 Yeah, it's hard to get a read because if you think, 0:42:06.640 --> 0:42:10.680 like there was so much worry and again jumping around here, 0:42:10.719 --> 0:42:13.320 but I just connecting all the different kind of earnings threads, 0:42:13.360 --> 0:42:15.400 Like there was so much worry going into Apple's report 0:42:15.440 --> 0:42:18.240 of like where where's the Chinese consumer? Are they buying iPhones? 0:42:18.320 --> 0:42:19.759 Things like that? You know, it's the same dollar that's 0:42:19.800 --> 0:42:23.320 going towards these things. But yeah, it's really hard to 0:42:23.320 --> 0:42:26.520 get a read because Apple well performs, Esday Lauder underperforms. 0:42:27.040 --> 0:42:27.400 Yeah, it is. 0:42:27.480 --> 0:42:28.640 It is just a kind of you know, most of 0:42:28.680 --> 0:42:30.120 the analysts, they said here in New York, they're just 0:42:30.160 --> 0:42:31.560 looking at data points, so it is kind of a 0:42:31.640 --> 0:42:32.040 tough read. 0:42:32.239 --> 0:42:34.040 I'm looking at the stock of Esday Lauder and looking 0:42:34.080 --> 0:42:36.560 at the chart here at Pete at about three hundred 0:42:36.560 --> 0:42:38.800 and seventy dollars literally on the last trading day of 0:42:39.000 --> 0:42:42.200 twenty twenty one, down seventy five percent since then, Wow, 0:42:42.280 --> 0:42:45.000 from three seventy to here we are at ninety four, 0:42:45.120 --> 0:42:47.520 So a big move here, And I guess the next 0:42:48.080 --> 0:42:49.880 you know, in Vidia is coming up. 0:42:50.040 --> 0:42:52.399 That's still not for another week or so, right. 0:42:52.520 --> 0:42:53.600 Yeah, that's next Wednesday. 0:42:53.760 --> 0:42:56.719 I mean, they're so late in the earning cycle. I 0:42:56.760 --> 0:42:58.799 don't know why. I'm sure there's a story there, but man, 0:42:58.880 --> 0:43:01.080 it feels like the market's going to be hanging on 0:43:01.320 --> 0:43:01.600 that one. 0:43:01.719 --> 0:43:04.560 Are the expectations as high as they always have been 0:43:04.760 --> 0:43:05.920 for in video? 0:43:06.000 --> 0:43:09.720 Yeah, they will, of course, they will be flying extremely 0:43:09.800 --> 0:43:11.960 high into that that report. And then if we think 0:43:12.920 --> 0:43:14.960 kind of about the AI story of this earning season 0:43:15.080 --> 0:43:17.160 is that people have been maybe investing a little bit 0:43:17.160 --> 0:43:20.040 too much. We're not seeing the growth that we would 0:43:20.040 --> 0:43:21.880 have liked out of those investments. But of course in 0:43:21.960 --> 0:43:23.600 videos on the other side of that, they're one, they're 0:43:23.600 --> 0:43:26.359 the ones receiving a lot of that investment. So could 0:43:26.480 --> 0:43:30.359 be again kind of the outperformer of of of that group. 0:43:30.440 --> 0:43:33.600 But yeah, definitely very high expectations. And yeah, with high 0:43:33.640 --> 0:43:35.279 expectations there's high risk as well. 0:43:35.960 --> 0:43:38.360 Anything else on your radar read that you're looking for. 0:43:38.520 --> 0:43:40.360 You know, we're in that kind of weird period for 0:43:40.440 --> 0:43:42.680 earnings where you only get the stragglers. Is there anyone 0:43:42.760 --> 0:43:43.920 else we should really keep an eye on. 0:43:44.200 --> 0:43:46.040 Yeah, I mean, it's just it's it's continue with the 0:43:46.520 --> 0:43:49.320 retail stocks over the next week especially. 0:43:49.360 --> 0:43:50.080 I'm just trying to think. 0:43:50.080 --> 0:43:52.120 There's like a thousand names running through my mind now. 0:43:52.960 --> 0:43:55.600 But the retailers, they tend to come late in the cycle. Yeah, 0:43:56.160 --> 0:43:59.279 it'll be good, good read on the consumer. And then again, 0:43:59.400 --> 0:44:03.640 as you mentioned that, the the Nvidia coming up, this 0:44:03.680 --> 0:44:05.840 can be huge, not just for like Nvidia itself or 0:44:05.880 --> 0:44:08.520 the tech stocks in general, but I think the market overall. 0:44:08.680 --> 0:44:10.840 Yeah, it really seems like it's the will show us 0:44:10.880 --> 0:44:13.560 the money phase of the AI craze right now, So 0:44:14.000 --> 0:44:15.960 you know, you know, an end video might be the 0:44:16.000 --> 0:44:16.600 outlier there. 0:44:16.640 --> 0:44:18.640 But all right, we'll say on top of it, I'm 0:44:18.680 --> 0:44:19.480 sure we'll be talking to you. 0:44:19.560 --> 0:44:21.719 Red Red Brown, Ernie's reporter Bloomberg News, joining us live 0:44:21.760 --> 0:44:25.080 here in our Bloomberg Interactive of Broker's studio here. 0:44:25.360 --> 0:44:29.839 This is the Bloomberg Intelligence podcast, available on Apples, Spotify, 0:44:30.080 --> 0:44:33.239 and anywhere else you get your podcasts. Listen live each 0:44:33.280 --> 0:44:36.440 weekday ten am to noon Eastern on bloomberg dot com, 0:44:36.760 --> 0:44:40.120 the iHeart radio app tune In, and the Bloomberg Business app. 0:44:40.280 --> 0:44:43.280 You can also watch us live every weekday on YouTube 0:44:43.520 --> 0:44:45.280 and always on the Bloomberg terminal